Together, commercial banks and savings institutions insured by the FDIC earned record profits in the first quarter, while the number of “problem” banks continued to decline.

According to the FDIC, net income for FDIC-insured institutions reached an all-time high of $40.3 billion in Q1, up by 15.8 percent from last year. The increase marks the 15th straight quarter earnings improved year-over-year.

The agency also reported half of the 7.019 insured institutions pulled in higher profits compared to the year before, while 90 percent of institutions recorded positive net income for the quarter.

FDIC’s list of “problem” banks was reduced for the eighth straight quarter, decreasing to 612. Two years ago, 888 banks were on the list.

At the same time, the FDIC saw just four of its institutions collapse in the first quarter, which is the smallest number since the second quarter of 2008 when two institutions failed.

So far his year, regulators closed 13 FDIC-insured institutions, down significantly from 24 during the same period in 2012.

“Today’s report shows further progress in the recovery that has been underway in the banking industry for more than three years. We saw improvement in asset quality indicators over the quarter, a continued increase in the number of profitable institutions, and further declines in the number of problem banks and bank failures,” said FDIC Chairman Martin J. Gruenberg. “However, tighter net interest margins and slow loan growth create an incentive for institutions to reach for yield, which is a matter of ongoing supervisory attention.”

Foreclosure inventory continued to shrink in April, with the number of homes in some stage of the foreclosure process down 24 percent year-over-year, according to data from CoreLogic.

About 1.1 million homes sat in foreclosure inventory in April compared to 1.5 million properties a year ago, CoreLogic reported. Foreclosure inventory also dipped month-over-month, falling 2 percent from March to April.

At the same time, the overall share of mortgaged homes in foreclosure inventory declined to 2.8 percent in April from 3.5 percent in March.

The data provider also reported the number of homes lost to foreclosure decreased 16 percent year-over-year in April to 52,000. Compared to March, the number of homes lost to foreclosure remained unchanged.

Prior to the crisis, completed foreclosures averaged 21,000 per month between 2000 and 2006.

“The shadow of foreclosure and distress continues to fade, with the annualized sum of completed foreclosures having declined for 17 straight months,” noted Dr. Mark Fleming, chief economist for CoreLogic, in a release. “Six states have year-over-year declines in the foreclosure inventory of more than 40 percent, and in Arizona and California the year-over-year decline is more than 50 percent.”

The rule, set to take effect January 10, 2014, establishes basic requirements designed to ensure consumers don’t take on loans they can’t pay back. Those guidelines require stricter monitoring and verification by lenders; they also prohibit no- or low-doc loans. Loans issued as “qualified mortgages” are presumed to comply with those terms.

According to CFPB, Wednesday’s amendments are the result of months of input offered by industry groups and the public at large.

“Our Ability-to-Repay rule was crafted to promote responsible lending practices,” said CFPB director Richard Cordray. “Today’s amendments embody our efforts to make reasonable changes to the rule in order to foster access to responsible credit for consumers.”

The new amendments exempt certain nonprofit and community-based lenders who work to help low- and moderate-income consumers get into affordable housing. Generally speaking, the exemptions apply to designated categories of community development lenders and to nonprofits that make no more than 200 loans per year and that only lend to lower income consumers.

On the same token, mortgage loans made by or through a housing finance agency or through certain homeownership stabilization and foreclosure prevention programs are also exempt, CFPB announced.

Another new amendment adjusts the Ability-to-Repay rule in order to facilitate lending by small creditors (including community banks and credit unions that have less than $2 billion in assets and that make 500 or fewer first-lien mortgages annually).

In its latest reading on home values, Lender Processing Services, Inc. (LPS) reported strong price gains in March and increases in every state and metro the data provider tracks.

In dollar terms, the LPS Home Price Index (HPI) averaged $213,000 in March. The figure represents a 1.4 percent increase from February and a 7.6 percent improvement from March 2012. From January of this year to March, prices have climbed 2.9 percent.

However, national prices remain 19.5 percent below their June 2006 peak. According to LPS, Texas has already returned to its peak level, while Colorado sits just 0.7 percent below its 2007 peak.

Out of the 20 largest states LPS tracks, Georgia posted the biggest gain from February to March, rising 2.6 percent, followed by Nevada (+2.4 percent), Washington D.C. (+2.1 percent), Washington (+2.1 percent), and Illinois (2.1 percent).

None of the states observed for the month showed price declines, but the states that brought in the smallest gains were Rhode Island, Tennessee, Pennsylvania, Vermont, Oklahoma, and Texas, where price increases ranged from 0.6 percent to 0.7 percent.

After analyzing 40 of the largest metro areas, LPS reported the markets that experienced the largest monthly price gains were San Jose (+3 percent), Atlanta (+2.6 percent), Las Vegas (+2.6 percent), San Francisco (+2.3 percent), and Deltona, Florida (+2.3 percent).

The bottom metro for March was Memphis, where price rose by just 0.2 percent. Prices increased by 0.4 percent for the remaining metros in the bottom five: York, Pennsylvania; Chattanooga, Tennessee; Harrisburg, Pennsylvania; and San Antonio.

While 22 percent of Americans admitted they have never checked their credit report, nearly a quarter also said they have encountered issues with their credit report, with incorrect or outdated negative marks leading as the main type of problem, according to a recent FindLaw.com survey.

Overall, 23 percent of Americans said they have had a problem with their credit report, and 10 percent of problems were related to incorrect or outdated information about their credit history, such as delinquency payments, payment history, collection actions, court judgments, and bankruptcies.

At 9 percent, incorrect or outdated personal information, such as one’s address, marital status, and work history, was the second most commonly reported problem.

Other issues Americans reported included identity theft or credit information getting mixed up with someone else’s (5 percent), as well as credit scores that were incorrectly reported as being too low (3 percent).

Another 4 percent said they have been denied credit because of incorrect information on their credit report.

“Your credit report contains a large amount of information drawn from a wide range of sources,” explained Stephanie Rahlfs, an attorney and editor with FindLaw.com. “[T]here is always the potential for your credit report to contain inaccurate or outdated information. A credit report can have an enormous influence on a person’s ability to obtain a mortgage, credit card, auto loan or other credit, and can also be used in making hiring decisions.”

Among the available foreclosure prevention tools, short sales are becoming the weapon of choice for servicers while the use of loan modifications has slowed, data from Fitch Ratings revealed.

For example, among bank servicers, the percentage of resolutions in the loan modification category decreased to 26 percent in the last half of 2012 from 57 percent in the first half of 2010, according to Fitch’s latest quarterly index.

However, for nonbank servicers, loan modifications are ranged between 69 to 71 percent during the same time period.

Meanwhile, short sales showed significant increases over the last couple of years. In 2012, short sales represented 51 percent of resolutions for bank servicers, up from a low of 20 percent in 2010. For nonbank servicers, short sales grew to 16 percent in 2012, up from 11 percent in 2010.

“Loan modifications have fallen due partly to overall declines in mortgage delinquencies,” explained Diane Pendley, managing director at Fitch. “However, they may also have fallen out of favor since many modified loans have already failed and do not qualify for another modification.”

In instances where modifications are not possible, the rating agency explained servicers will look to a short sale, which allows servicers to save by avoiding the cost of dealing with a foreclosure.

Fitch also compared staffing levels for banks and nonbanks, noting a diverging trend. In late 2010, bank staffing levels expanded rapidly as banks worked to address the high level of defaults, but they are now reducing their staff as defaulted loans become resolved or transferred. Nonbank services though have shown a need to expand in response to their growing portfolios.

Using a three-month moving average, the survey found distressed sales accounted for 33 percent of home purchases in April, a decrease from 35.6 percent in March and 43.6 percent in April 2012. The figure for April is the lowest level since the HousingPulse survey began accumulating data on such properties in 2009.

As expected, investor activity also slowed during the same time period. According to the survey, 21.6 percent of purchases were made by investors for the month, which is the lowest level recorded for investors since November.

Despite the overall decrease in distressed sales and investor activity, the survey reported short sale activity has gone up for investors, with investor short sale purchases up to 35.3 percent, an increase from 31.8 percent in March and 30.5 percent in April 2012.

Investors also appeared to be more focused on buying foreclosures that require repair work as they pursue properties to convert to rentals, HousingPulse reported. In April, 62.8 percent of damaged REOs were bought by investors, down from 63.9 percent in March, but up from 60.4 percent a year ago.

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